John Healey to announce 3.9 percent minimum wage hike in Autumn Budget

Chancellor John Healey is poised to announce an above-inflation minimum wage hike in Wednesday's Autumn Budget. The wage rise for thousands of workers will take the adult National Living Wage past the £13 threshold for the first time.

According to primary reporting by The Times, the adult National Living Wage—which applies to workers aged 21 and over—will increase from its current level of £12.71 to roughly £13.20 an hour. Concurrently, the National Minimum Wage for younger workers aged 18, 19, and 20 will rise from £10.85 to approximately £11.27 an hour. These changes are slated to take effect in 2027.

Media additions

The increases are higher than the latest annual Consumer Prices Index (CPI) inflation rate, which was 3.5% in the 12 months to September 2026, as reported by the Express. Adults may see a real-terms pay increase, because inflation is expected to peak above 4% in the next few months before easing at the start of next year.

As Aol notes, the party previously pledged to scrap discriminatory age bands and align the wages of 18 to 20-year-olds with those of older adults as swiftly as possible.

Ministers faced mounting pressure to alter course following alarming data showing that the number of young people not in education, employment, or training (NEETs) surpassed one million earlier this year for the first time since 2013, as highlighted by Aol. Business owners have consistently argued that steep minimum wage hikes price entry-level workers out of the job market. Alex Hall-Chen of the Institute of Directors (IoD) warned via the Birmingham Mail that combined employer National Insurance contributions and statutory rights have generated a crisis in the cost of employment.

"Combined with an increase in the National Living Wage of over 40pc since 2021, there is a crisis in the cost of employment which is leading many employers to curb hiring and look to automation and outsourcing as alternatives."

Alex Hall-Chen, Institute of Directors, via Birmingham Mail

Conversely, trade union advocates have pushed back against claims that equalising youth wages harms employment. The TUC pointed to internal analysis indicating that 85 percent of young people are already paid above the baseline rate, while the Low Pay Commission previously observed that past equalisation efforts for older brackets did not negatively impact employment rates.

Unpaid carers stand to benefit from the abolition of the controversial cliff-edge rule under the Carer's Allowance. The Guardian reports that the Chancellor will replace this with a digital taper system, deducting only £1 of support for every £1 earned over the limit.

Additional everyday interventions include locking in tax-free mileage rates at 55p per mile for the first 10,000 business miles for frontline workers such as nurses, care workers, and builders over the next 15 years, alongside raising the rate for mileage beyond that threshold to 35p. Parental pay will likewise expand to cover more than 150,000 extra families annually, and import tariffs will be cut on staple items like baked beans, chocolate, and gherkins.

James Smith, an economist at ING, told the Birmingham Mail that the minimum wage decision would be a key factor for the Bank of England next year.

Responding to a separate announcement regarding a 5 percent pay increase for Members of Parliament, John O’Connell, chief executive of The TaxPayers' Alliance, voiced sharp public frustration.

"Taxpayers will be seething to see politicians receive an inflation-busting pay rise, all while they suffer a personal recession. After years of broken promises, falling living standards and deteriorating public services, MPs are being rewarded for failure with a princely pay boost."

John O’Connell, Chief Executive of the TaxPayers' Alliance, via TaxPayers' Alliance

Chancellor John Healey will deliver the complete fiscal package on Wednesday, where the formal confirmation of the 3.9 percent minimum wage adjustment, alongside reforms to carer allowances and import tariffs, will face immediate legislative scrutiny and market evaluation.